Solar power industry set for slower growth
Print Edition
China’s solar power industry is set to grow slower this year because it faces problems in financing and construction although the outlook remains optimistic, experts said at an ongoing photovoltaic technology exhibition in Shanghai.
Although the country’s solar power generation surged 26.4 percent from a year ago in the first four months, “the pace over the year may not exceed 10 percent,” said Andreas Liebheit, president for photovoltaics business at German silver paste maker Heraeus, at the 12th International Photovoltaic Power Generation and Smart Energy Exhibition.
Alex Liu, analyst for energy and public utility at UBS, said that “power producers worldwide would be conservative on China’s growth in this industry this year because they have concerns over financing and project development.”
Last year China’s solar power generation surged 51.7 percent annually to surpass the global average of around 30 percent.
But “conundrums covering a cut in subsidy and overload in power grids are limiting the performance” this year, Liu said.
Overcapacity in the solar power industry has resulted in cuts in the subsidy for renewable energy producers, according to industry watchers.
Around a decade ago domestic producers rushed into the solar power industry because of the high subsidy but “they are now suffering from less profit in line with the subsidy cuts,” said Li Gang, general manager of Jiangsu Seraphim Solar System Co, a domestic solar power component maker.
The feed-in tariff for solar power generators in 2015 was around 1 yuan (16 US cents) per kilowatt-hour, but last year it fell to as low as 0.55 yuan per kwh. The feed-in tariff is the price set by the government for sellers of renewable energy and is normally above the price of traditional coal power to support the development of clean energy.
“That would hinder China’s further solar power generation growth as producers find it hard to get their money back,” Liebheit said.
Besides the financing problem, “it is harder to connect solar power into the power grid in China ... as it takes a long distance to transmit electricity from west to the east, while grids in the east are too loaded to add electricity,” Liebheit said.
Facing these two problems, “the installation of solar power in China this year may fall 20 percent,” Li said. “Because many component makers have little profit to make this year, especially those relying heavily on subsidies.”
Liebheit said the country should upgrade power grids as it would help solar power producers boost installations. The country’s leading producers can generate solar power at as low as 0.31 yuan per kwh, “even below the price of coal power.”
China, being the world’s largest solar power equipment producer which accounts for over 80 percent of the global production capacity, has pushed the global growth last year to around 30 percent.
But this year, the benefit of component cost drops has been offset by the two conundrums, with domestic demand growth “steady rather than rapid,” said Liebheit. “And that is also dragging down the global pace.”
He expects the global annual growth to fall to around 10 percent this year, while China “would not exceed the average.”
Liu agrees and said this year the global pace will be boosted by other emerging markets such as India, South Europe and South America.
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